Australia's largest department store chain reported better-than-expected sales of $688 million in the thirteen weeks to October 27, as warm spring weather encouraged summer clothing purchases and it offered smaller discounts on sale items.

Myer hadn’t reported an annual increase in quarterly sales since investors led by private equity company TPG Capital put it back on the market in an October 2009 initial public offering, according to data compiled by Bloomberg.

Investors have reponded poitively to the news, with Myer shares rising 2.5 per cent to $2.05.

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Chief executive Bernie Brookes said the trading environment during the first quarter continued to be difficult, but there was a modest improvement in consumer sentiment.

"While we welcomed the October interest rate cut, there are a myriad of factors currently in the mix and influencing discretionary spend, so we continue to be cautious about the trading environment," he said.

Speaking to analysts and media, Mr Brookes was upbeat about the uplift in sales continuing toward Christmas. "Each month has been positive comparative sales growth and that’s carried on through November,’’ he said.

But Mr Brookes remained cautious about trading conditions and said an official interest rate cut was warranted.

‘‘November’s no different. It’s still a tough trading environment,’’ he said.

Mr Brookes said the company’s turnaround strategy appeared to be having an impact.

‘‘In the context of this environment, we have been pleased with continued progress in executing our five-point strategic plan to improve customer service, to enhance our merchandise offer, strengthen our loyalty program, build a leading omni-channel offer and optimise our store network,’’ he said.

Myer’s best performing categories during the quarter were menswear, womenswear, cosmetics and children’s wear and the strongest performing states were Western Australia and Queensland.

Loyalty rewarded

During October, Myer launched two new loyalty programs - a Myer one smart phone application which allows members to scan their digital loyalty card to earn shopping credits and a pay with points initiative with the Commonwealth Bank.

Mr Brookes said the Sass & Bide fashion brand, which Myer acquired early last year, was selling particularly well.

He said Myer was also pleased with the design of its stores at the start of the festive trading and summer fashion season.

‘‘We are looking forward to our busiest time of year during the Christmas and stocktake trading,’’ he said.

Myer did not provide sales or profit guidance.

Same-store sales rose 0.8 per cent in the 13 weeks to October 27. That bettered forecasts for a 0.4 per cent rise in a Reuters survey of six analysts, in which forecasts ranged from a fall of 0.9 per cent to a rise of 2.0 percent.

Australia's economy, helped by a once-in-a-century mining boom, has withstood the global slowdown better than most, but its strong currency is encouraging shoppers wielding tablet computers and smartphones to hunt down bargains overseas.

Retailers are having to offer discounts to keep up, a situation made harder by relatively high interest rates and falling or flat home and share values.